Question

Instructions Plymouth Electronics had the following transactions that produced liabilities during 2020 a. Purchased merchandise on credit for $80,000. (Note: Assume a periodic inventory system.) b. Year-end wages of $40,000 were incurred, but not paid. Related federal income taxes of $13,000 and Medicare taxes of $580 were withheld. Employee wages are all above the Social Security maximum, so only Medicare was paid c. Year-end estimated income taxes payable, but unpaid, for the year were $113,615. d. Sold merchandise on account for $3,636, including state sales taxes of $180. (Note: Assume a periodic inventory system.) Employer's share of Medicare taxes for the period was $580. The taxes will be paid at a later date.. e. Borrowed cash under a 180-day, 8%, S155,000 note. f. Required: Prepare the entry to record each of these transactions (treat each transaction independently).

Answer 1

					BALANCE SHEET			INCOME STATEMENT
Date	Account Title	Post Ref.	Debit	Credit	Assets	Liabilities	Equity	Revenue	Expenses	Net Income
a	Purchase		$80,000						$80,000	-$80,000
	Accounts Payable			$80,000		$80,000
	(To record merchandise purchase)
b	Payroll Expense		$40,000						$40,000	-$40,000
	Federal Income Tax With holdings Payable			$13,000		$13,000
	Medicare Taxes Payable			$580		$580
	Cash			$26,420	-$26,420
	(To record accrued wages and related liabilities)
c	Income Tax Expense		$113,615						$113,615	-$113,615
	Income Tax Payable			$113,615		$113,615
	(To record accrued income taxes)
d	Accounts Receivable		$3,636		$3,636
	Provincial Sales Taxes Payable			$180		$180
	Sales Revenue			$3,456				$3,456		$3,456
	(To record sale)
e	Employment Insurance Expense		$580						$580	-$580
	Employment Insurance Payable (Employer)			$580		$580
	(To record employer payroll taxes)
f	Cash		$155,000		$155,000
	Notes Payable			$155,000		$155,000
	(To record issuance of note)
					$132,216	$362,955	$0			-$230,739